Press Release
CCCS REVEALS DEBT RECOMMENDATIONS
26 April 2006
In the first quarter of 2006, only 14 percent of CCCS counselling clients (2,731 people) were recommended that bankruptcy was the best way to solve their debt problem, according to figures released in Debt Dashboard, a quarterly digest of statistics released by CCCS to place debt statistics in an economic context.
This is the first time that counselling recommendations, covering over 1,000 people a week and aimed at offering the best advice in the client’s circumstances, have been fully analysed and published.
The analysis showed that a high proportion of clients – ten percent in Q1 2006 – were able, after counselling, to meet the contractual repayments on their debts and only needed advice from CCCS on better budget management. The most common recommendation from counselling sessions was for the client to go on a Debt Management Plan to begin repaying their debts.
The most heavily advertised approaches to debt solution – IVAs and consolidation – were found suitable for a small proportion of people in debt. Clients recommended to IVAs were only one in 40 of those counselled and no consolidation loans were recommended during the quarter.
Although these findings highlight good news for lenders and borrowers, the average debt of a client coming to CCCS for advice in Q1 of 2006 was £30,167, a rise of 7.5 per cent on Q1 of 2005[1].
Commenting on the figures, chairman Malcolm Hurlston said:
“We noticed signs in 2005 that our clients were becoming more savvy and were in better financial shape to pay off their debts. The indications from this latest Debt Dashboard go some way to affirming that notion.
“It is good news for lenders, as a greater proportion of people coming for counselling are able to meet their repayments. Likewise it is good news that most clients feel responsible and are enthusiastic about finding a way to pay back what they owe.
“There is cause for concern that the heavy advertising of consolidation loans may lead to inappropriate solutions. To avoid the same danger with IVAs, we strongly support last week’s repeated recommendation of the Insolvency Practices Council: that practitioners should be required to provide written best advice, monitored by their responsible bodies.
“Thanks to investment in staff, efficiency gains and a concerted effort in the counselling centres, CCCS was able to counsel two-thirds more people (19,000 as opposed to 12,000) in the first quarter of this year than in the first quarter of 2005.”
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